Bill Text: IA SF2209 | 2015-2016 | 86th General Assembly | Introduced
Bill Title: A bill for an act relating to higher education by providing for the establishment of the state of Iowa higher education bank and revolving fund and eliminating the deduction for federal taxes paid by certain individual income taxpayers and including retroactive applicability provisions.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2016-02-17 - Subcommittee, McCoy, Feenstra, and Quirmbach. S.J. 258. [SF2209 Detail]
Download: Iowa-2015-SF2209-Introduced.html
Senate File 2209 - Introduced SENATE FILE BY McCOY A BILL FOR 1 An Act relating to higher education by providing for the 2 establishment of the state of Iowa higher education bank and 3 revolving fund and eliminating the deduction for federal 4 taxes paid by certain individual income taxpayers and 5 including retroactive applicability provisions. 6 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: TLSB 5433XS (3) 86 gh/sc PAG LIN 1 1 DIVISION I 1 2 CREATION OF STATE OF IOWA HIGHER EDUCATION BANK 1 3 Section 1. NEW SECTION. 525.1 Higher education loan 1 4 program. 1 5 1. The treasurer of state shall administer a program to 1 6 provide loans to students or parents of a student to finance 1 7 all or a portion of the cost of a student's attendance at an 1 8 institution of higher education. A loan provided by the bank 1 9 under this section shall have a rate of interest fixed at one 1 10 percent per year. 1 11 2. The treasurer, in consultation with the college student 1 12 aid commission, shall adopt rules for the bank to provide loans 1 13 pursuant to this section. The rules shall include student 1 14 eligibility requirements, repayment terms, and any other rules 1 15 necessary to properly administer the bank's higher education 1 16 loan program. 1 17 Sec. 2. NEW SECTION. 525.2 Establishment of state of Iowa 1 18 higher education bank. 1 19 Subject to article VIII, section 6, of the Constitution of 1 20 the State of Iowa, the state of Iowa higher education bank is 1 21 created with the purpose of encouraging and promoting higher 1 22 education in the state. 1 23 Sec. 3. NEW SECTION. 525.3 Definitions. 1 24 As used in this chapter, unless the context otherwise 1 25 requires: 1 26 1. "Bank" means the state of Iowa higher education bank 1 27 established under this chapter. 1 28 2. "Institution of higher education" means any educational 1 29 institution that offers a postsecondary educational degree, 1 30 certificate, or program of study and is eligible to receive 1 31 Tit. IV funds under the federal Higher Education Act of 1965, 1 32 as amended, or state funding or assistance. 1 33 3. "Taxable income" means as defined in section 422.4. 1 34 Sec. 4. NEW SECTION. 525.4 Management of bank == duties of 1 35 treasurer. 2 1 The treasurer of state shall operate, manage, and control 2 2 the bank, locate and maintain its places of business, and make 2 3 and enforce orders, rules, regulations, and bylaws for the 2 4 transaction of its business. The treasurer shall employ and 2 5 fix the qualifications, duties, and compensation of employees 2 6 of the bank and may enter into contracts for any services that 2 7 may be required to conduct the business of the bank. 2 8 Sec. 5. NEW SECTION. 525.5 Advisory board of directors. 2 9 1. An advisory board of directors to the bank shall 2 10 be appointed to provide recommendations to the treasurer 2 11 regarding the bank. The advisory board shall consist of five 2 12 members appointed by the governor and confirmed by the senate 2 13 pursuant to section 2.32. Two members of the general assembly 2 14 shall serve as ex officio, nonvoting members, one senator to 2 15 be appointed by the majority leader of the senate and one 2 16 representative to be appointed by the speaker of the house of 2 17 representatives. The advisory board shall not be compensated. 2 18 Each member shall serve a term of four years. 2 19 2. The advisory board of directors shall have the following 2 20 duties: 2 21 a. Meet regularly with the management of the bank to review 2 22 the bank's operations to determine whether recommendations 2 23 should be provided to the treasurer relating to improved 2 24 management performance, customer service, internal methods, 2 25 procedures, and operating policies. 2 26 b. Provide recommendations to the treasurer relating to the 2 27 establishment of additional objectives for the operation of the 2 28 bank. 2 29 c. Provide recommendations to the treasurer relating to 2 30 employment practices and personnel policies. 2 31 d. Meet regularly with the treasurer to present any 2 32 recommendations relating to the bank. 2 33 e. Advise the treasurer with respect to the powers and 2 34 functions of the bank. 2 35 Sec. 6. NEW SECTION. 525.6 Commencement of business. 3 1 The bank shall not transact any business except such 3 2 business as is incident to commencement of business until the 3 3 treasurer determines that the bank has acquired the minimum 3 4 capital necessary to operate and remain solvent. In doing so, 3 5 the treasurer shall consult with the superintendent of the 3 6 banking division to evaluate and determine the approximate 3 7 amount of capital required to commence operations. 3 8 Sec. 7. NEW SECTION. 525.7 Acquisition of capital. 3 9 The bank shall acquire capital to operate from any of the 3 10 following sources: 3 11 1. Repayment of loans and accrued interest. 3 12 2. Appropriations from the general assembly or federal 3 13 government. 3 14 3. Revenue from annual taxable income exceeding three 3 15 hundred seventy=five thousand dollars in the case of a single 3 16 person, or seven hundred fifty thousand dollars in the case of 3 17 a married couple, as provided in section 421.17, subsection 14. 3 18 4. Funds derived from the settlement of legal disputes 3 19 subject to approval from the general assembly. 3 20 Sec. 8. NEW SECTION. 525.8 State of Iowa higher education 3 21 bank revolving fund. 3 22 1. A state of Iowa higher education bank revolving fund 3 23 is created in the state treasury under the control of the 3 24 treasurer. The moneys in the fund shall be used by the 3 25 treasurer for the purpose of operating the state of Iowa higher 3 26 education bank. 3 27 2. The fund shall consist of moneys credited to the fund 3 28 pursuant to section 525.7 and any other moneys available to 3 29 and obtained or accepted by the treasurer for placement in the 3 30 fund. Notwithstanding section 12C.7, subsection 2, interest or 3 31 earnings on moneys in the fund shall be credited to the fund. 3 32 Notwithstanding section 8.33, moneys that remain unencumbered 3 33 or unobligated at the close of the fiscal year shall not 3 34 revert but shall remain available for the same purpose in the 3 35 succeeding fiscal year. 4 1 DIVISION II 4 2 FEDERAL DEDUCTIBILITY == APPROPRIATION TO STATE OF IOWA HIGHER 4 3 EDUCATION BANK REVOLVING FUND 4 4 Sec. 9. Section 421.17, Code 2016, is amended by adding the 4 5 following new subsection: 4 6 NEW SUBSECTION. 14. a. Beginning in calendar year 2017, 4 7 the department shall by October 15 of each year determine 4 8 the difference between the net amount of individual income 4 9 taxes due and paid for the fiscal year ending on the preceding 4 10 June 30 and the net amount of individual income taxes that 4 11 would have been due and payable during that fiscal year had 4 12 the provisions of section 422.9, subsection 2, paragraph "b", 4 13 subparagraph (2), not been applicable, and shall certify such 4 14 amount to the treasurer of state. 4 15 b. There is appropriated from the general fund of the state 4 16 to the state of Iowa higher education bank revolving fund 4 17 created in section 525.8 for the fiscal year beginning July 1, 4 18 2017, and for each fiscal year thereafter, an amount equal to 4 19 the amount certified during the fiscal year by the department 4 20 of revenue to the treasurer of state pursuant to paragraph "a". 4 21 Sec. 10. Section 422.9, subsection 2, paragraph b, Code 4 22 2016, is amended to read as follows: 4 23 b. (1) Add the amount of federal income taxes paid or 4 24 accrued, as the case may be, during the tax year and subtract 4 25 any federal income tax refunds received during the tax year. 4 26 Where married persons, who have filed a joint federal income 4 27 tax return, file separately, such total shall be divided 4 28 between them according to the portion of the total paid or 4 29 accrued, as the case may be, by each. Federal income taxes 4 30 paid for a tax year in which an Iowa return was not required 4 31 to be filed shall not be added and federal income tax refunds 4 32 received from a tax year in which an Iowa return was not 4 33 required to be filed shall not be subtracted. 4 34 (2) Notwithstanding subparagraph (1), federal income taxes 4 35 paid for a tax year beginning on or after January 1, 2016, 5 1 in which the taxpayer's net income exceeds three hundred 5 2 seventy=five thousand dollars in the case of a single person, 5 3 or seven hundred fifty thousand dollars in the case of a 5 4 married couple, shall not be added, and federal income tax 5 5 refunds received from a tax year beginning on or after January 5 6 1, 2016, in which the taxpayer's net income exceeds three 5 7 hundred seventy=five thousand dollars in the case of a single 5 8 person, or seven hundred fifty thousand dollars in the case of 5 9 a married couple, shall not be subtracted. 5 10 Sec. 11. RETROACTIVE APPLICABILITY. This division of this 5 11 Act applies retroactively to January 1, 2016, for tax years 5 12 beginning on or after that date. 5 13 EXPLANATION 5 14 The inclusion of this explanation does not constitute agreement with 5 15 the explanation's substance by the members of the general assembly. 5 16 This bill establishes the state of Iowa higher education 5 17 bank and revolving fund and provides money for the fund by 5 18 disallowing a deduction for federal taxes paid for certain 5 19 taxpayers. The purpose of the fund is to promote and encourage 5 20 higher education in the state. 5 21 Division I provides the state treasurer with the authority 5 22 to operate, manage, and control the public state bank, 5 23 including locating and maintaining its places of business, 5 24 adopting rules and regulations, and employing staff for any 5 25 services that may be required for the bank to conduct its 5 26 business. 5 27 The bill establishes an advisory board of directors to 5 28 provide recommendations to the treasurer regarding the bank. 5 29 The board consists of five members appointed by the governor 5 30 and confirmed by the senate. Two members from the general 5 31 assembly shall serve as ex officio and shall be appointed by 5 32 the majority leader of the senate and the speaker of the house 5 33 of representatives. The board shall not be compensated and 5 34 each member shall serve a term of four years. The board shall 5 35 provide recommendations to the treasurer regarding the bank's 6 1 operations, additional objectives, the hire of employees, and 6 2 any other recommendations relating to the bank. 6 3 The bill provides that the bank shall not commence its 6 4 operations until the treasurer, after consulting with the 6 5 superintendent of banking, determines that the bank has the 6 6 minimum capital necessary to operate and maintain solvency. 6 7 The bill provides that the bank shall acquire capital to 6 8 operate from the repayment of loans and accrued interest, 6 9 appropriations from the general assembly or federal government, 6 10 revenue from disallowing a deduction for federal taxes paid 6 11 for income taxpayers whose income exceeds $375,000 (single) 6 12 or $750,000 (married) annually, and funds derived from legal 6 13 settlements subject to approval from the general assembly. 6 14 The bill provides that the bank shall establish a higher 6 15 education loan program to provide loans to students or 6 16 parents of a student to finance the cost of attendance at an 6 17 institution of higher education, as defined in the bill. A 6 18 loan provided under this program shall have a fixed rate of 6 19 interest at 1 percent per year. The treasurer, in consultation 6 20 with the college student aid commission, is required to adopt 6 21 rules to administer the program. 6 22 The bill establishes a state of Iowa higher education bank 6 23 revolving fund in the state treasury and under the control of 6 24 the treasurer to consist of moneys acquired by means specified 6 25 in the bill. Moneys in the fund are to be used to operate the 6 26 bank and shall not revert to the general fund of the state. 6 27 Division II disallows the Iowa income tax deduction for 6 28 federal income taxes paid for tax years beginning on or after 6 29 January 1, 2016, if the taxpayer's net income for the tax year 6 30 exceeds $750,000 ($375,000 for a single person). Beginning in 6 31 2017, the bill requires the department of revenue to calculate 6 32 the additional Iowa income tax revenues collected as a result 6 33 of the disallowance of federal deductibility for each fiscal 6 34 year and certify that amount to the treasurer of state by 6 35 October 15. For each fiscal year beginning on or after July 1, 7 1 2017, an amount equal to the amount certified by the department 7 2 of revenue during the fiscal year is appropriated from the 7 3 general fund of the state to the state of Iowa higher education 7 4 bank revolving fund created in Code section 525.8. 7 5 Division II applies retroactively to January 1, 2016, for 7 6 tax years beginning on or after that date. LSB 5433XS (3) 86 gh/sc
